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E - FSBO Co-op Commission: Offer a commission?

COOPERATING WITH AGENTS

If you decide to sell by-owner and also offer a commission to agents who represents a buyer, this is referred to as a co-op or a co-op fee.  “Cooperating” with agents could still save a by-owner at least half of a full commission. 

Advertising a commission:

If you advertise a commission, such as, “Will Co-op 3%” or “3% to Buyer’s Agent” while you FSBO, you'll find that buyers who see this in your ad could view the real asking price as being some 3% below the advertised price. The buyers may feel that they are doing the job of a buyer’s agent. If nothing else, they know that you’re able to come down 3% right off the top.

Here are three ways to approach this:

Don't offer a co-op fee in your ads. In a hot sellers market (fewer homes for sale), desperate agents may knock on your door. Evaluate your situation and motivation at that time for a quick sale. You can always negotiate the fee. If the agent truly has a buyer, the agent knows that a lower fee (like 2%) is better than nothing. After all, the agent could lose the buyer and have zilch.

 A second approach is to simply say in your ad, " Will co-op". This way, an amount will not be given to potential buyers.

Lastly, if you need a quicker sale, consider advertising " 4% to buyers agent". This will catch the attention of local agents.

If you're approached by an agent in a down market, ask yourself, "Why on earth would an agent want to show my home when there are so many unsold houses on the market?" That's because the buyer is really interested in it. You've got something the listed houses don't have; location, style, neighborhood – something. Therefore, in this situation, there's no need to offer a regular commission. 

Forget about sending letters to agents and offices offering a co-op. The agents will either ignore them or call about listing your home. 

The co-op agent works for the buyers:

Even though you’re the one paying the commission, the buyer’s agent is legally obligated to tell his buyer client everything he or she knows about you and your housing situation. So, do not reveal anything to a co-op agent. 

If an offer materializes, let the agent be the one to get the offer up to where you want it. The agent wants the sale; let the agent help earn the commission.

Agents will want you to sign a “24-hour” listing agreement. This protects them from their buyers going directly to you. The agreement contains something like a 60-day period whereby you will owe a commission if you sell direct to those particular buyers during this time. These conditions are reasonable. Make sure the agreement specifies that it is for the one named buyer.

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